Social media - the sweet spot to selling online

January 22, 2013

The huge growth in popularity of social media has created new opportunities to engage with customers, develop sales and add value to brands. However, it has also created new challenges and legal liabilities. What are the legal risks? And what are the best practices to manage these risks and avoid brand damage?

Banana skins

Social networks are unforgiving. What can seem like a good marketing idea at the time can backfire and rapidly inflict serious brand damage as the blogosphere seizes on the slightest social media faux-pas. The source may be an ill-judged message or campaign, or an unthinking employee. In the early days of Twitter, Habitat thought it would be a good idea in order to get more attention to their brand to include unrelated trending hashtags (eg #trueblood (a popular TV show)) in promotional tweets. The reaction was immediate and angry: “Naughty, money-grabbing furniture outlet. Bad bad bad. Now I’m glad I can’t afford your overpriced Ikea replicas”.

Brand impersonation

It is not difficult to set up a Twitter or Facebook account that impersonates a brand; and consumers can be easily misled. This might be done by jokers, scammers or counterfeiters. The negative impact on a brand can grow exponentially if false offers, scams, malicious information, spoofs or jokes get shared on social media networks.

Even using a third party’s trade mark as a hashtag could result in trade mark infringement if it creates a likelihood of confusion or association with the third party’s products or, if the third party trade mark is a very well-known mark, takes “unfair advantage” of the mark.

Brand owners need to monitor this but also pick their battles carefully. In some cases action is needed, but in other cases wading in with defensive or threatening comments may do more harm than good.

Spoofing

Keep your account details secure. Tom Watson, the Labour MP, had his private Twitter account hijacked by a female intern who, while he was in a meeting, tweeted to his 65,000 followers “I should log out of my twitter so that my intern doesn't twit-rape me ...”. Afraid that the intern would be fired, the hashag #savetheintern then trended high.

In cases of account or brand spoofing the starting point is to use Twitter’s own dispute resolution process to suspend the account. In serious cases which Twitter does not resolve, brand-owners can take legal action to force Twitter to remove the account and reveal the identity of the account owner.

Legal compliance

Unfair Trading Regulations prohibit using media to promote a product where the trader has paid for the promotion without making that clear. In addition, the Regulations prohibit traders posting content which falsely creates the impression that the trader is a customer.

In 2011, the Advertising Standards Authority’s powers were extended to cover online advertising, including use of social media. The ASA have already upheld a number of complaints concerning misuse of social media. A recurring issue is complaints that tweets breach the requirement that “marketing communications must be obviously identifiable as such”; for example, the ASA ruled that a Twitter campaign for Nike featuring Wayne Rooney and Jack Wilshere breached the CAP Code because it was not sufficiently recognisable as advertising. Nike had the dubious privilege of being the first organisation to have its Twitter campaign banned by the ASA.

Offences

Under the Communications Act it is an offence to send a communication (e.g. a tweet) that is grossly offensive or indecent, obscene or of a menacing character. Liam Stacey received a 56-day jail term after sickeningly tweeting "LOL" when footballer Fabrice Muamba collapsed. So, a tweet can land you in prison. Even if not criminal, an offensive tweet sent by a member of your staff in an unthinking moment of recklessness can become widely known and cause substantial brand damage.

Employee issues

Companies need to remind their employees not to share company confidential information on public social networks. Lewis Hamilton compromised McLaren by tweeting sensitive technical information from his and team-mates qualifying laps. Maclaren removed the tweet within an hour, but not before many of Hamilton’s one million followers had already re-tweeted it. Such a breach of confidentiality could breach an employee’s legally implied duties to his employer or express confidentiality clauses in his service contracts. That could lead to disciplinary action or, in serious cases, dismissal for gross misconduct.

Social media policy

How should businesses manage the risks of social media? A good starting point is to identify the specific risks for your business and then formulate a social media policy. You then need to provide training to those of your staff who are engaged in social media to ensure that they understand the risks and how to protect the business’s brand. A social media policy could cover the following:

Ensure that your brands and usernames are protected on the main social media platforms by setting up “official” sites. Use verified accounts where available (e.g. the blue verified badge on Twitter).

Set up terms of use on your own sites where user-generated content can be posted to outlaw inappropriate content, and reserve the right to take-down content which is offensive or damaging.

Allocate responsibility and implement procedures to monitor social networks for anything adverse to your brands, including reputational damage, infringers of intellectual property, impersonators or others intent on causing brand damage. And have a policy and process to decide what if any action is to be taken.

Educate your staff about the risks; prohibit employees sharing confidential corporate information or posting offensive or denigrating comments about the company, its products or staff. And use disciplinary action to enforce breaches of the policy.

When something goes wrong, deal with it promptly, openly, honestly and sensitively.

Explore whether cyber-liability insurance is available at commercial rates.